Johnson Zeroes In on Directors’ Role After Thomas Cook Failure
Johnson Zeroes in on Directors’ Role After Thomas Cook Failure
(Bloomberg) -- U.K. Prime Minister Boris Johnson questioned the role of the directors in Monday’s collapse of travel company Thomas Cook Group Plc, hinting his government might be ready to impose stricter rules on them.
Traveling to New York for the United Nations General Assembly, Johnson defended a decision to refuse a government bailout that he said had been requested, to the tune of about 150 million pounds ($187 million).
“That’s a lot of taxpayers’ money,” he told reporters. “It sets up a moral hazard.”
Thomas Cook called in administrators after failing to hammer out a bailout deal with creditors and shareholders. On Friday, the tour operator said it needed 200 million pounds on top of the 900 million pounds already agreed in a proposal led by China’s Fosun Tourism Group, its biggest shareholder.
The government had pushed back all weekend against the idea of stepping in, saying it wasn’t in the national interest for it to do so. Previous government bailouts include rescues for Royal Bank of Scotland Group Plc and Lloyds Banking Group Plc.
For now, Johnson said his main focus was getting all the stranded holidaymakers home -- 150,000 of them British residents, according to the Financial Times. The government’s website called the operation the largest repatriation in peacetime history.
The government was already looking at the rules surrounding holiday company directors after another holiday firm, Monarch Airlines, folded in 2017. Johnson suggested action was now needed.
“We do need to look at ways in which tour operators, one way or another, can protect themselves from such bankruptcies in future,” he said. “One is driven to reflect whether the directors of these companies are properly incentivized.”
To contact the reporter on this story: Robert Hutton in London at rhutton1@bloomberg.net
To contact the editors responsible for this story: Matthew G. Miller at mmiller144@bloomberg.net, James Ludden, Linus Chua
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